Archive | Urban sprawl

Advocates of removing urban growth boundaries have hailed a research paper on the effect of zoning on house prices, issued by the Reserve Bank of Australia last week.

The research paper, by Ross Kendall & Peter Tulip, was published in the bank’s discussion paper series “intended to make the results of the current economic research within the Reserve Bank available to other economists”.

The bank noted: “Its aim is to present preliminary results of research so as to encourage discussion & comment. Views expressed in this paper are those of the authors and not necessarily those of the Reserve Bank. Use of any results from this paper should clearly attribute the work to the authors and not to the Reserve Bank of Australia.”

The authors wrote in their abstract: “Zoning regulations provide benefits, but they also restrict housing supply and hence raise prices. This paper quantifies their importance by comparing prices to the marginal costs of supply at different points in time. For detached houses, marginal costs comprise the dwelling structure & the land that other home owners need to forego.

“Relative to our estimates of these costs, we find that, as of 2016, zoning raised detached house prices 73% above marginal costs in Sydney, 69% in Melbourne, 42% in Brisbane & 54% in Perth.

“Zoning has also raised the price of apartments well above the marginal cost of supply, especially in Sydney. We emphasise that this is not the amount that housing prices would fall in the absence of zoning. The effect of zoning has increased dramatically over the past 2 decades, likely due to existing restrictions binding more tightly as demand has risen.”

In their introduction, the Australian researchers wrote: “Some government policies, which we will refer to as zoning, restrict the supply of housing. Examples include minimum lot sizes, maximum building heights & planning approval processes. Although these restrictions may confer benefits, they also raise the price of housing. This paper attempts to quantify the effect of zoning on housing prices in Australia’s 4 largest cities.

“Anecdotal evidence suggests that zoning can have a huge effect on land values. For example, a 363ha site in Wyndam Vale (40km west of Melbourne) increased in value from $A120 million to $A400 million following its rezoning from rural to residential.

“Examples like this are common. Such large increases in values as a result of zoning changes are inconsistent with the view that a physical shortage of land itself is the main cause of high land values & housing prices – and instead point towards a high ‘shadow price’ of government permission to build dwellings as a likely explanation. It is difficult, however, to gauge how representative these anecdotes are, or to analyse how they change over time or place.”

3 issues – urban footprint, zoning & construction rules

3 planning issues are involved, and appear confused here. One is the allowance (& support) for expansion of the urban footprint; the second is the zoning confining property activities to specified areas. Third are the many rules on construction, such as height:boundary.

In the New Zealand context, Auckland has had an issue with the urban growth boundaries instituted by the region’s local bodies in the late 1990s, which made it nigh on impossible to expand the urban footprint.

The Auckland Regional Council was most opposed to expansion, while the Manukau & Waitemata territorial councils pressed the case for enabling development to expand.

The Auckland City Council saw the boundary constraint as an aid to intensification, which suited the council for the region’s central isthmus.

With inadequate boundary expansion & inadequate forethought given to intensification, the immigration spike of 2003-04 under the Labour government was met by an inadequate supply of new homes.

But the net inflow during that spike peaked at 35,000/year. This time round, the inflow began to surge in 2013, reached 60,000/year in August 2015 – compared to a total net inflow of 65,000 over the previous 7 years – and reached 70,000/year in October 2016.

It’s easy to see that housing supply could have caught up during that 7-year immigration slump, but that’s asking a sector which traditionally expands when the sun’s out to do so during a downpour.

The supply of money increased when the US introduced its quantitative easing programme (and other countries adopted similar measures) as a means of exiting the global financial crisis of a decade ago, but it also slashed interest rates.

This meant people could borrow more; it also meant prices would rise.

Attributing a rise in house prices to “zoning” (or, I think in the Australian examples as well as in New Zealand, inadequate expansion of the urban footprint) is irrational if these other causes are ignored, and it’s difficult to see in this Australian research what value is placed on the positives of regulation or on other economic factors such as the contribution of low interest rates.

Auckland’s unitary plan

As for zoning in the New Zealand context, Auckland’s unitary plan – the combination of both regional & district plans that preceded it, and updated – has provided a far greater capacity for intensification throughout suburbia, as well as providing for greenfield expansion. But that plan is new, and it will take time for the effects to be felt.

The next question concerns the orderly & efficient provision of infrastructure to enable intensification & expansion – one of the 2 reasons for creating the urban boundary. The other reason was to curtail urban encroachment into Auckland’s countryside, and that still hasn’t been dealt with sensibly.

Failure to get adequate infrastructure in place has been an important factor limiting greenfield projects, suburban development & city-centre intensification. The issue in all cases has been funding, it’s been an issue for decades and nobody has rushed to resolve it.

It could have been solved through bonds, which used to be part of local body financing, and a new finance structure established by councils through Local Government NZ should enable it.

In Auckland, infrastructure demands are enormous, both for new development and to expand capacity of existing networks, but ratepayers are loathe to increase their payments to the council for infrastructure that doesn’t directly affect them.

The debate is long overdue on how to fund infrastructure. Priorities for underground infrastructure, however, are in place through the Auckland Plan, approved in 2012 with updates from Watercare and the council’s internal stormwater department.

The metropolitan urban limit for the whole Auckland region has been in place for 23 years, and cemented in place in 1999 as part of a long-term regional growth strategy. The need to provide for growth was recognised, but the political structure meant the regional council’s primary concern was to prevent damage rather than to enable construction.

Expansion was provided for, but not to the extent required to meet sudden influxes of migrants, as happened in 2003-04 and is happening now. In the last 3 years New Zealand has been host a net inflow of 160,000 migrants, 74,000 of those settling in Auckland.

Such influxes suit economic priorities for consumer demand, not for steady, programmed expansion.

Another factor occurring internationally is investors’ acquisition of assets for their capital value potential, ignoring traditional measures such as income & yields.

In those circumstances, it’s not surprising that provision for steady growth hasn’t been working. First, because the provision was too inflexible; second, because population surges can’t be accommodated; third, because asset investors have turned investment logic on its head.

Now, because asset prices have risen exponentially, it’s not practical to impose a previously cheap pricing regime on development. To do so would throw local borrowers, and their lenders, into debt positions which they couldn’t escape. The answer to that is to raise the bottom pricing layer as well, which means everything else also has to rise, including fixed incomes.

In other words, inflation takes care of it, with some help.

The calls to abandon the urban boundaries are premature by a few weeks. Auckland Council has spent just under 6 years putting new, consistent planning structures in place for the whole region. The last piece of the jigsaw, the unitary plan, combines the old regional council’s land use regional plan and the 7 old territorial councils’ zone-based district plans into one, theoretically co-ordinated plan.

Auckland Council brought this plan into the public eye in June 2012, after city centre & waterfront masterplans were approved. The council finalised its recommendations in September 2013 and sent the package off to an independent panel headed by resource management lawyer David Kirkpatrick, who was made an Environment Court judge in the process.

That panel finished its hearings 10 days ago, but long before it got to the end it made it clear that it was thinking differently from the council about how the new rural:urban boundary system should work. What the panel proposes will be revealed in its recommendations back to the council, due to be delivered on 22 July. The council will decide by 19 August whether to accept the panel’s recommendations.

For over 2 decades, the power of decision on moving the old metropolitan urban limits was primarily with the regional council and is now with the unitary Auckland Council. The new council has been planning for change, and only now is beginning to push changes to urban land use, principally through its development-facilitating arm, Panuku Development Auckland; through the start of a fundamentally different transport system centred on the city rail link; and through prioritised underground infrastructure provision around the region.

As the unitary plan process began, Housing Minister Smith decided to fill in the 3 years before the unitary plan was to come into effect with the creation of special housing areas. He’s been ridiculed for the slow pace of housing development in those areas, and the number of approved development areas which have then been marketed for sale – without any development starting.

But in a place where fast-tracking is unusual, switching into top gear doesn’t happen overnight. Dr Smith’s ploy had an immediate intent of getting construction underway, but more impotently a longer-term intent of dismantling the cautious structures of the old councils.

In a release last week, he said: “I was given the housing portfolio in January 2013 and immediately identified Auckland Council’s metropolitan urban limits, set in 1993 when the population was half a million less than today, as a huge barrier to meeting housing needs both now and in the future.

“The Government’s housing programme has involved the systematic dismantling of Auckland’s metropolitan urban limit. I have used special housing areas to override the limits in the short-term while fast-tracking with the independent hearings panel a new plan for Auckland with adequate housing supply.”

The new unitary plan is only 6 weeks away from going to the council, and I’m confident it will provide a far more permissive approach to new housing because of the depth of analysis that has gone into the new plan.

“It would be counter-productive to ditch this work at this time with a simplistic approach of just abolishing city limits. We still need some rules to ensure new urban areas have appropriate infrastructure & services and that we make separate provision for industry from housing.”

On the way through that statement Dr Smith disparaged Labour & its housing spokesman, Phil Twyford, for not supporting Government thinking earlier, and Mr Twyford for insisting having no boundaries ‘will mean uncontrolled sprawl from Pukekohe to Warkworth’. Dr Smith welcomed Labour’s change in thinking.

In the unitary plan, Auckland Council has proposed urban boundaries around existing major urban areas, right down to some of the smaller settlements in the region, and has agreed to future urban zones being topped up through rezoning to ensure 7 years’ supply is available.

Opponents of having any boundary attribute escalating land prices in many fringe areas to the longstanding metropolitan limit and the ability of speculators to take advantage of that through landbanking. That position will remain so long as inadequate alternative supply is available, or perhaps through regulation.

But freeing up fringe land also comes at a price: Recent US research indicates that land well away from employment, which looks comparatively cheap, is no longer cheap when transport costs are included. Providing piping & services to sprinkled settlements is also not as cheap or efficient as moving suburbia outward in large chunks.

Work on growing employment alternatives needs to resume. Before the advent of the super-city, the region’s outer councils were working on ways to grow the business base they lacked, for both employment that would cut commuting and as a stronger rates base for council income.

Alongside the spread of business zones – which has been sorely needed for longer than there’s been any residential crisis – localised, suburban intensification should be provided for. It’s part of the unitary plan as proposed by Auckland Council, and likely to be accepted.

Intensification in outer suburbs is a useful way of offering residents more options without needing to be wholesale street-upon-street apartment blocks.

Whatever form new housing takes, infrastructure provision still needs to be prioritised, even if the strict boundary line goes.

What’s the best size for a city?US home ownership slidingStudy says sprawl’s US dominance declining

Tracking ideas is a Bob Dey Property Report section devoted to ideas on property questions such as urban strategies & design, many from overseas but with relevance to Auckland.

What’s the best size for a city?

International urbanism consultant Brent Toderian wrote on his blog this week: “Every once in a while, I get asked by media or elected officials whether a successful, attractive city can decide to stop growing. A variation of that question is whether there’s an ideal size for a city or region, and if a city can choose to stop growing at that ideal size.”

Mr Toderian, former city planning director in Vancouver and president of the Council for Canadian Urbanism, now runs his own business, Toderian UrbanWorks. The growth question arose in the density debate surrounding the projection that another million people would move into metropolitan Vancouver by 2040. The wider Vancouver region has a population of 5.3 million, and the metropolitan area 2.5 million.

It’s a question raised in Auckland too, as motorists face worsening congestion, sprawl continues and apartment development becomes more common. Here’s the beginning of Mr Toderian’s response, and the link to the full article:

“Is there an ideal city size? I’ve never really believed in that concept. Although some academics have postulated an ideal city size, and I’ve participated in such thought exercises for the ‘entertainment value,’ it’s been my observation that such theories can be influenced by everything from personal preference, to ideology, to debatable assumptions, to wishful thinking.

“Are medium-sized cities ‘better’ than bigger cities? Some of the various liveability rankings out there have favoured medium-sized global cities such as Vancouver, Melbourne & Vienna – but as has been covered somewhat gleefully in global media lately, other commentators have taken pleasure in describing such medium-sized, liveable cities as ‘sleepy & boring.’”

Like affordability across the Anglo-Saxon world, home ownership rates are also showing international trends: downward.

A study by the Urban Institute, expanding on the US Census Bureau’s American community survey, points to some hard figures, shifts over different timespans, and some social & racial impacts.

Broadly, the US home ownership rate peaked at 67.3% 9 years ago and looks like dropping as low as 60% over the next 15 years.

The Urban Institute report said: “US homeownership rates averaged around 64% until about 1990, when they began to climb dramatically, reaching 67.3% in 2006. The housing crisis that began in 2007 and the ensuing recession, from which the US economy is recovering slowly, resulted in a fall in the homeownership rate to 63.6%, according to the latest Census Bureau community survey numbers.

“Taking the long view of homeownership – starting in 1900 – we can observe clearly that changes in home ownership rates in the US have been as remarkable as those in household size. For the first 4 decades of the 1900s, fewer than half of homes were owner-occupied. Housing finance policies (especially the low-down-payment, 30-year, self-amortising mortgage created by the Federal Housing Administration and support for veterans under the GI Bill) and increasing incomes helped raise the total home ownership rate from 44% at the end of the Depression to 62% in 1960.

“Over the next 45 years, home ownership climbed to 67% despite a slight decline in the 1980s. But home ownership dropped sharply after 2006, to an estimated 63.6% in 2013.

“For 30- to 34-year-olds, for example, home ownership rose from 26% in 1940 to 56% in 1960 and continued climbing to 61% in 1980. The home ownership rate for adults in their early 30s then declined to 53% in the 1980s, grew by 1 percentage point between 1980-2007, and plummeted to 44% in 2013.

“Hope Now estimates that 7.5 million borrowers lost their home to short sale, foreclosure sale, REO sale (sold by a lender after they’ve taken possession) or deed-in-lieu between the third quarter of 2007 & 2014. Of these, 5.3 million lost their home in 2010–14.

“Erosion of home ownership for blacks threatens to undermine their ability to gain & maintain economic stability, not to mention build assets. By 2030, our home ownership projections suggest a range of home ownership rates for blacks from 38-42%, a substantial setback from 2000, when black homeownership exceeded 46%.”

Overall home ownership would drop from 65.1% in 2010 to 62.3% in 2020 and 60.3% in 2030.

A study published in the Proceedings of the US National Academy of Sciences finds evidence of the decline of sprawl as the dominant form of construction in the US, a Planetizen article this week says.

The abstract for the study paper says: “Sprawl started well before private car ownership was dominant and grew steadily until the mid-1990s. Over the last 2 decades, however, new streets have become significantly more connected & grid-like; the peak in street-network sprawl in the US occurred in ∼1994. By one measure of connectivity, the mean nodal degree of intersections, sprawl fell by ∼9% between 1994-2012.

“We analyse spatial variation in these changes and demonstrate the persistence of sprawl. Places that were built with a low-connectivity street network tend to stay that way, even as the network expands. We also find suggestive evidence that local government policies impact sprawl, as the largest increases in connectivity have occurred in places with policies to promote gridded streets & similar New Urbanist design principles.”

The US-based Lincoln Institute of Land Policy will publish the second edition of its Atlas of Urban Expansion next year.

The first edition, published in 2012, was “a critical online resource for data & images tracking global urbanisation”. The institute said the 2015 edition would reflect the scope of large & fast-growing metropolitan areas around the world.

Leaders from the United Nations Human Settlements Programme, the Lincoln Institute and the NYU Stern Urbanisation Project signed an agreement at the World Urban Forum in Medellin in April to support the research leading to the online publication of the atlas on their websites.

Over half the world’s population lives in cities now, but researchers estimate that will rise to two-thirds in the next few decades – 6 billion out of a projected 9 billion people. The UN estimates that about one billion people already live in informal settlements in substandard conditions, and that two-thirds of rural migrants moving into cities in sub-Saharan Africa are moving directly to informal settlements, or slums.

The 2015 edition of the atlas will contain maps & metrics describing the expansion of a new global sample of 200 cities, up from the original 120, representing 5% of the world’s cities with populations exceeding 100,000 in 2010.

As in the first edition, the new atlas will be based on the classification & mapping of Landsat satellite imagery in combination with census-based population data for the administrative districts comprising the built-up areas of cities. It will contain maps & metrics for each of the 200 cities in the sample for 3 time periods, 1990, 2000 & 2010. Metrics will include the extent of built-up areas for each city, the population of the city, the average density of its built-up area, the increase in the city area brought about by the inclusion of the open spaces in & around its built-up area, and the extent to which the city is compact – its footprint resembling a circle.

While the focus of the atlas is on the quantitative aspect of urban expansion, the institute said future phases of a broader initiative, Monitoring global urban expansion, would focus on quality, including such measures as walkability, arterial grids, open space, affordable housing & the provision of basic services such as water & sewer.

“Without evidence that the expansion areas are accessible to jobs or whether land & housing in expansion areas are affordable, which establishes a relationship between public preparation for urban expansion and the quality of the built environment, urban policymakers will continue to act without an empirical basis for their decisions.”

Future phases of the initiative involve the analysis of high-resolution satellite imagery of the expansion areas of all the cities in the sample, and engaging people on the ground in each of the cities in the sample. These phases are in a pilot stage, being tested in 4 cities: Addis Ababa & Mekele in Ethiopia and Bogotá & Valledupar in Colombia.

A 2010 working paper which contributed to the research, The persistent decline in urban densities: Global & historical evidence of ‘sprawl’, found significant differences in the average population density in the built-up areas of a global sample of 120 cities: In 2000, average density was 28±5 persons/ha in cities in land-rich developed countries, 70±8 in cities in other developed countries, and 135±11 in cities in developing countries.

Between 1990-2000, built-up area densities in this sample declined by about 2%/year. The researchers concluded that, “at current rates of density decline in the cities of developing countries, for example, when their urban populations double in the next 30 years, as now expected, their built-up areas will likely triple. Minimum preparations for this massive expansion are clearly in order.”

The Lincoln Institute of Land Policy, now based in Cambridge, Massachusetts, focuses on the study of land policy & land-related tax policy around the world.

Published 23 September 2007Randal O’Toole, the chief anti-planning critic of Portland, Oregon, issued a new attack on the Cato Institute website in July, Debunking Portland: The city that doesn’t work.

In response, on the Congress for New Urbanism website, Florida Coastal School of Law assistant professor Mike Lewyn ran a fact check on O’Toole points – start dates are an obvious point of difference – and produced Debunking Cato: Why Portland works better than the analysis of its chief neo-libertarian critic.

Ignore the fact that this debate is about a particular city, and you can still find plenty to chew over – one topical area for debate, in Auckland as well as in Portland, is the role of the metropolitan urban limit. In American debates on this sort of issue I find position-taking hampers rational discussion, so a view on this sort of policy is often all or nothing.

Mr O’Toole, in addition, vilifies a former mayor of Portland, Neil Goldschmidt, who carried on playing pivotal roles in urban planning long after he left mayoral office. Even if Mr Goldschmidt acted for personal gain, I don’t believe extending vilification to an entire bureaucracy on that basis is rational. The same kind of attack is made here, periodically, and my response remains the same: If that is the best you can do, you don’t have an argument. Nevertheless, once you get past the personal focus, there are valid issues to look at.

Mr O’Toole said in his executive summary:“Though many people consider Portland, Oregon, a model of 21st–century urban planning, the region’s integrated land-use & transportation plans have greatly reduced the area’s liveability. To halt urban sprawl and reduce people’s dependence on the automobile, Portland’s plans use an urban-growth boundary to greatly increase the area’s population density, spend most of the region’s transportation funds on various rail transit projects and promote construction of scores of high-density mixed-use developments.

“When judged by the results rather than the intentions, the costs of Portland’s planning far outweigh the benefits. Planners made housing unaffordable to force more people to live in multifamily housing or in homes on tiny lots. They allowed congestion to increase to near-gridlock levels to force more people to ride the region’s expensive rail transit lines. They diverted billions of dollars of taxes from schools, fire, public health & other essential services to subsidise the construction of transit & high-density housing projects.

“Those high costs have not produced the utopia planners promised. Far from curbing sprawl, high housing prices led tens of thousands of families to move to Vancouver, Washington & other cities outside the region’s authority. Far from reducing driving, rail transit has actually reduced the share of travel using transit from what it was in 1980. And developers have found that so-called transit-oriented developments only work when they include plenty of parking.

“Portland-area residents have expressed their opposition to these plans by voting against light rail & density and voting for a property-rights measure that allows landowners to claim either compensation or waivers for land-use rules passed since they purchased their property. Opposition turned to anger when a 2004 scandal revealed that an insider network known as the ‘light-rail mafia’ had manipulated the planning process to direct rail construction contracts & urban-renewal subsidies to themselves.

“These problems are all the predictable result of a process that gives a few people enormous power over an entire urban area. Portland should dismantle its planning programmes, and other cities that want to maintain their liveability would do well to study Portland as an example of how not to plan.”

Portland hard to label, says Lewyn

Professor Lewyn, in his response, said he found Portland a lot harder to label than critics assumed: “Not only is it less expensive than some other major cities, particularly those in the West, its residents also spend somewhat less time in traffic.”

Among counter-points from Professor Lewyn:“In this report, I seek to show that O’Toole’s attacks on Portland often miss the mark by distorting & misrepresenting data.

“O’Toole argues that Portland’s planning system is unpopular because ‘several recent elections & other events have seen defeats for the planners, but they continue to plan anyway.’ However, most of his claims relate to events nearly a decade ago, such as rezoning decisions in the late 1990s. More recent events do not support his assertion that Portlanders yearn to turn Portland into a more conventional city.

“O’Toole himself writes that, between 1990-2000, Portland grew by 21%. This rate of increase is only slightly lower than that of Portland’s surrounding suburbs; during the same 1990-2000 period, the population of the Portland urbanised area grew by about a third. [Oh dear, which manipulator of statistics do you support here? The margin between 33% & 21% is 57% going up, 36% going down; either way, it’s not “slightly lower”].

“But O’Toole prefers to see the glass as half-empty rather than as half-full: according to O’Toole, the fact that some suburbs are growing faster than Portland is evidence that ‘people escaped Portland’s planning system by moving to communities outside the reach of Portland planners.’ This argument overlooks the possibility that a suburb with a large amount of undeveloped land will always grow faster than a suburb or central city with less undeveloped land, even under a relatively pro-urban planning system. Thus, Portland should be compared not just to its own suburbs but to other cities with less aggressive planning policies. Is the ‘growth gap’ between Portland & its suburbs larger or smaller than the gap between other cities & their suburbs? If the gap is larger, then maybe Portland has been doing something wrong. But if the gap is smaller, Portland’s planning policies, whatever their demerits, may have limited sprawl…..

“If Portland had always been a rapidly growing city, it could be argued that Portland’s policies had nothing to do with its progress. But in fact, Portland actually lost population between 1950-80, unlike Denver, Seattle & Salt Lake City (all of which experienced modest population growth during this period). So if Portland had not enacted an urban growth boundary in the early 1980s, it might have become a declining city like Baltimore or Cleveland, rather than a slowly growing city like Denver or Salt Lake City.”

Do Portlanders like Portland’s system?

“A 2005 survey of Oregon voters showed 69% believed that growth management made Oregon a more desirable place to live. An equally high percentage valued ‘planning-based decisions for land use’ over ‘market-based decisions for land use.’ Only 32% believed that current land-use regulations were ‘too strict’; an equal number said land-use regulations were ‘about right and 21% even believed that Oregon’s land-use regulations were ‘not strict enough.’ In other words, planners ‘continue to plan’ because Oregonians want them to continue to plan, even as they reject those planners’ occasional excesses.”

Mr O’Toole is a senior fellow with the Cato Institute and has a new book about to be released, The best-laid plans: How Government planning harms your quality of life, your pocketbook & your future. He’s spent most of his life in the Portland area.

One of the leading US advocates of suburbia over urban intensification, Joel Kotkin, claims in his latest piece, Presenting the new economic map of America, the hinterland is growing in population & high-end jobs at the expense of established coastal cities because people want to move to smaller places.

Planetizen picked up his article, and subscribers there roundly criticised Mr Kotkin for turning figures to ideological use.

It seems easy enough to work out that a full house can’t keep growing population at the same speed as an empty house â€“ it’s the same as any comparison between things that start from a low base and those on a high base.

Mr Kotkin cited housing cost as a major reason for moving out of densely populated cities, and looked at the move to industrialisation followed by the change of business away from it as causes of population shifts. In these contexts he then ascribed percentages living in rural or suburban areas as a “stated preference”.

The Planetizen critics picked up on this point: Do people move to a cheaper place because they want to, or because they have to?

NZ relevance

The argument has a fair amount of relevance here. Auckland City Council & McConnell Property Ltd launched a scheme at the end of November to help working families into affordable housing â€“ well designed & well built homes, supported by financial schemes made available through the skills & experience at the NZ Housing Foundation.

That kind of scheme is aimed at beating the cost spiral that forces poorer people to the fringes and also makes them pay higher transport costs. Mr Kotkin said â€“ with the usual putting down of opponents that’s an unfortunate aspect of this sprawl versus intensification debate â€“ that the growing strength of local economies “is occurring largely to the wonderment of many journalists, academics & plannersâ€¦..

“These increasingly independent suburbs now boast their own â€˜town centres,’ have thriving religious & cultural institutions and even minor league sports teams. With the rapid movement of immigrants, these areas are also becoming more diverse. You can see the evidence in an explosion of ethnic and even elegant restaurants, concert halls & night clubs.”

The arguments here are not identical, especially in Auckland, where you can live at or near the coast without necessarily paying a high price for it, be part of sprawling suburbia and have a choice between central & out-of-centre jobs with sometimes little difference in travel requirements.

The Kotkin arguments on growth of local town centres partly support the growth strategies of organisations such as Auckland City Council, which wants to intensify development around suburban nodes, and of the fringe Kaipara, Rodney & Franklin District Councils, which have more comprehensive development plans for places like Mangawhai, Orewa, Pukekohe & Waiuku.

Ideologues have plenty of points to argue over in any Kotkin article, but this one also has plenty of pointers on how & where New Zealanders might live in decades to come.

One of the interesting points in terms of lifestyle that Mr Kotkin makes is that people in suburbia have built up plenty of infrastructure to entertain themselves, though they might go occasionally to a downtown game.

It was with that in mind that I supported the concept of Mt Smart as a potential stadium site, complete with numerous related activities around the arena and suburban town centres nearby to entertain the after-match flow, rather than adding to facilities on the cbd waterfront. At Albany, North Harbour Stadium is also taking on that “suburban” centre role, offering conference as well as sporting facilities, with a regional tennis centre nearby and a regional retail & business centre being developed.

Joel Kotkin is the author of The city: A global history and The new geography: How the digital revolution is reshaping the American landscape, is an Irvine Senior Fellow at the New America Foundation and senior advisor to Californian planning, design & environmental consulting firm the Planning Centre. He’s completed studies on the future of several major US cities, including New York, St. Louis, Phoenix, Los Angeles, the San Fernando Valley & the Inland Empire region of Southern California. In November 2005, in association with the Planning Centre, he finished a year-long study on the future of suburban development and this has been working on a study for the Reason Foundation on the future of US transport mobility.

Noted Californian urban visionary Joel Kotkin has produced a new article on the suburban future. Instead of sprawl, he wrote in Metropolis magazine (and on his own website), “clusters of self-sustaining suburban villages can be the way we grow – without sprawling.”

In one sense the liveable community concept, which Auckland City Council planners have been introducing around the city to improve growth capacity at the same time as population rapidly rises, is in line with the suburban village Mr Kotkin has in mind.

His concept is certainly different from the suburban business park developed over a number of years in Johannesburg and flourishing these days in Sydney, because those parks exclude the residential component.

In the Metropolis article, Toward a new archipelago, he wrote that the suburban villages he had in mind were more than extensions of their metropolitan areas (unbordered sprawl) but had become places in their own right with a town centre, a diversity of housing and an employment focus which pulls workers away from the long haul to the cbd.

More than adding a page to the debate on sprawl versus compact city, Mr Kotkin suggested this type of development could restore the work/family balance which the industrial revolution shattered.

There is evidence of the same kind of thinking here â€“ the planning for Silverdale North is perhaps the best example, with provision for housing diversity (including apartment blocks with lifestyle lots in close proximity), schools, rural aspects and city-style occupations. One difference, though â€“ it hasn’t been planned in terms of a cluster, more as taking up the next piece of available land.

Joel Kotkin is the author of The city: A global history and The new geography: How the digital revolution is reshaping the American landscape, is an Irvine Senior Fellow at the New America Foundation and senior advisor to Californian planning, design & environmental consulting firm the Planning Centre. He’s completed studies on the future of several major US cities, including New York, St. Louis, Phoenix, Los Angeles, the San Fernando Valley & the Inland Empire region of Southern California. In November 2005, in association with the Planning Centre, he finished a year-long study on the future of suburban development and this has been working on a study for the Reason Foundation on the future of US transport mobility.

Australia’s leading campaigner against land-use constraints as the cause of unaffordable housing, Bob Day, has advocated removing urban growth boundaries or zoning restrictions on the urban fringes of cities, says compulsory master planning should be abolished and says there should be no upfront development fees â€“ services should come out of rates.

Mr Day heads a major national building company, Home Australia Pty Ltd, is the former national president of the Australian Housing Industry Association, which has run campaigns for several years on affordability issues, and is now chairman of the Great Australian Dream Project, continuing the same campaign.

A key point to his advocacy against land availability constraints is this: “Urban planners, by promoting urban consolidation and at the same time demonising urban growth, have inflicted enormous damage on the economy & society in general and all without any factual, scientific or intellectually sustainable arguments to back up their misguided dogma.”

Mr Day laid out his latest demands in an address in Canberra on 23 September to the Australian Christian Lobby, Home truths: How urban planning is destroying the Great Australian Dream.

I’ve removed the early section of his address on family matters, but have run the rest of it below:

Traditionally, the median house price was around 3 times the median household income. For example, when the median income was just $A1000/year in the early 1960s one could buy a basic house on a basic block of land for $A3000. When the median income was $A10,000/year in the 1970s the median house price was $A30,000. When the median income was $A20,000/year in the 1980s the median house price was $A60,000. And when the median income was $A40,000/year in the early 1990s the median house price in most capital cities was $A120,000.

Young couples got a start in the housing market and worked up from there.

Today, in Adelaide, Melbourne & Brisbane, the median house price is more than 6 times the median income and in Sydney & Perth more than 8 times. The longstanding nexus between house prices & incomes has been broken.

The social & economic consequences and long-term ramifications of this change are horrendous, and by & large not at all understood. For example, at 6 times median household income a family will fork out about $A300,000 more on mortgage payments (principal & interest) over the life of a home loan than they would have had house prices remained at 3 times the median income. That’s $A300,000 they are not able to spend on their children’s education or family comforts or $A300,000 the family didn’t need to earn and mum &/or dad could have worked less, spent more time at home and not needed to spend money on childcare.

For those on middle & low incomes the prospect of ever becoming homeowners has now all but evaporated as they face the prospect of being lifetime renters. The intergenerational inequity created by this imbalance may not be evident at the moment but in time it will be. As we all know, if you don’t own your home by the time you retire you’re in big trouble.

We heard a lot last night about values. Well what does it say about the values of a society that accumulates wealth at the expense of the next generation? Traditionally, wealth is transferred from the older generation to the next, younger generation. Whatwehave done, for the first time in Australia’s history, is taken the younger generation’s wealth and added it to our own. Wayne Swan (Federal Labor MP) said earlier, “As a nation, we’ve never been richer”. If that is the case, why has the prospect of ever becoming homeowners all but disappeared for so many low- & middle-income earners?

What has caused this horrendous problem and what to do about it was the impetus for the establishment of The Great Australian Dream Project.

US cyclist Lance Armstrong once wrote a book, It’s not about the bike.Well I’m here to tell you today that when it comes to housing affordability, it’s not about the house! It’s about the land the house sits on. Over the past 5-10 years the price of residential land across Australia has nearly trebled. By comparison, the cost of building a new house on that land has hardly moved. Where land once represented 25% of the cost of a new house & land package, it is now 60%. This is a disaster for a family trying to build their first home.

The seeds of the housing affordability crisis we’re now experiencing were sown back in the 1970s. Land was abundant, affordable and its management was largely left to market forces. It was in this environment that state & territory governments (of all political persuasions) introduced land management agencies to establish & manage â€˜land banks’.

When they were established, the aim of these government agencies seemed noble enough. They were charged with acquiring then holding large tracts of broadacre land so a plentiful supply would be available to meet future homebuyer demand.

In South Australia, for example, the agency was called the South Australian Urban Land Trust, later to be called the Land Management Corporation, and its dual intention was stated as “to provide an adequate supply of land” & “maintain land affordability.”

It didn’t take long, however, before the emphasis began to shift. As land supply began to dwindle – the result of government planning regulation & zoning, a rationing effect came into play and prices started to rise.

These price rises were more dramatic than most thought possible and, at a time when first-home buyers really needed help, the noble intentions that had underpinned the formation of these land agencies evaporated and soon another set of aims was being devised.

In South Australia, the LMC charter is now to “maximise financial returns to Government”. Now, note the not-too-subtle shift of emphasis from the interests of the buyer to the interests of the seller. From “maintaining land affordability”to“maximising returns to Government.” The LMC owns something like 90% of the developable land (undeveloped land over 10ha) within Adelaide’s urban growth boundary.

I heard the chief executive of the LMC say just the other day hesupported Adelaide’s urban growth boundary. Well there’s the surprise of the century. Of course he supports the urban growth boundary, LMC is an arm of Treasury. It’s in the business of maximising financial returns to Government. And urban growth boundaries are the surest way of limiting supply. The Government sets the rules, plays in the game and then decides who else can & cannot play against them. Not only that, they make millions from extra stamp duty as property prices rise. If that isn’t a conflict of interest, I don’t know what is.

State & territory governments have made windfall profits at the expense of Australia’s first-homebuyers. According to their various annual reports, in 2004 the South Australian Land Management Corp made a profit of $A38 million, the West Australian Landcorp made a profit of $A45 million, VicUrban made $A45 million profit and the NSW agency Landcom made a whopping $A132m profit. Here in the ACT, the Land Development Agency also makes massive profits.

It is important to remember that the scarcity that propelled land prices is artificial. This so-called â€˜land shortage’ is not real. It is the product of restrictions invoked through planning regulation & zoning. A drive on any sunny day to the outskirts of all our major cities will reveal that there is abundant land suitable for housing development. The so-called â€˜land shortage’ is a matter of political choice, not of fact. Australia did not have to suffer this affordability crisis.

Perhaps we should be asking the Australian Competition & Consumer Commission to investigate the anticompetitive behaviour of these state & territory government land agencies. As with the Land Management Corp’s support for the urban growth boundary, it is in all their interests to keep out new entrants. Keeping out new entrants, however, is not in the best interests of either competition or consumers.

But as well as the profit motive, state & territory governments have been spurred along by an urban planning cheer squad which is obsessed with kerbing the size of our cities and pushing a policy of urban consolidation. Between them, they have excluded more low- & middle-income earners from home ownership than at any other time in Australia’s history.

We have been overwhelmed by an urban planning plague that has entangled our lives, sapped our strength, added cost to every transaction and severely limited our potential as a nation.

Now, the case for urban consolidation has been advanced on the back of a number of arguments, namely, that:

it is good for the environment
it stems the loss of agricultural land
it encourages people on to public transport
it saves water
it leads to a reduction in motor vehicle use and
it saves on infrastructure costs for Government.

None of these, I repeat, none of these is true. The facts & evidence from around the world refute each & every one of these claims. Urban consolidation:

is not good for the environment
it doesn’t stem the loss of agricultural land â€“ Australia has an abundance of fertile land suitable for agriculture
it doesn’t encourage people on to public transport
it doesn’t save water
it doesn’t lead to a reduction in motor vehicle use, and
it doesn’t save on infrastructure costs. In fact, building brand new infrastructure on the fringe is cheaper than renewing or upgrading old infrastructure in the inner suburbs that was not designed for higher-density living.

Does anyone really believe that forced compaction of communities can lead to less pollution, less vehicle use and savings on urban infrastructure? Do environments where there are no backyards for children to play and no room for trees to grow really offer better habitats than low-density suburbanisation? Will people stop using their cars and hop on buses? Does a cost of housing that precludes low- & middle-income earners from becoming homeowners really serve the greater interest of our society?

Nearly a decade ago Patrick Troy, emeritus professor at the Australian National University, authored the book, The perils of urban consolidation, in which he squarely challenged the assumptions on which the urban consolidation principles are based. He pointed to flaws in the figures & arguments which have been used over & over again to support what is speciously called smart growth, and he argued that these policies will produce â€˜mean streets’, not â€˜green streets’.

Now there’s been a lot of publicity lately about biodiversity & so-called â€˜urban dead zones.’ Naturally urban growth, or â€˜urban sprawl’ as they like to call it, has been blamed for this decrease in biodiversity. So tell me, which do you think is better for bio-diversity (Mr Day produced photos, which you can see on the Great Australian Dream Project website, 4 showing single-crop fields, one a row of terraced housing and the fifth a leafy suburban street)?

The first 5 scenes are biodiversity dead zones. The last scene, a typical outer suburban street, is a biodiversity live zone.

Now I know a lot of this goes against the grain, but it is incumbent on us to be honest & open about the facts. Scenes 1-4 are taken on the fringe of all our cities and are ideally suited to urban growth. We can have more biodiversity, less air pollution, healthier children & more affordable housing if we go with scene No 6, not scenes 1-5.

Urban planners, by promoting urban consolidation and at the same time demonising urban growth, have inflicted enormous damage on the economy & society in general and all without any factual, scientific or intellectually sustainable arguments to back up their misguided dogma.

Billions of dollars have been wasted and enormous pain inflicted on the community as a result. And all they ever say in defence of their ideology is “it depends on what you want our cities to look like.” Well, if you ask me, they’d look a whole lot better without the traffic congestion, air pollution, destruction of biodiversity and high-density infill projects which have destroyed the character of some of our most beautiful suburbs that they have inflicted upon us.

The economic consequences of all that has happened over these past few years have been as profound as they have been damaging. The capital structure of our economy has been seriously distorted and getting it back into alignment with reality will take time. But it is a realignment that is necessary. We cannot deny the rising generation a home of their own merely to satisfy the indulgences of town planners and state & territory treasury officials. We cannot deny ourselves the joys of grandchildren because the young women of Australia have to work to pay mortgages instead of raising a family. The joke that high mortgages are the new contraceptive is becoming no laughing matter. Young women used to be afraid of getting pregnant, now they are afraid of not getting pregnant. We have to get back to the situation where a couple can pay off a mortgage on one income so they can start a family in their late 20s, not in their late 30s or early 40s.

The history of state & territory land management & urban planning policies and the extraordinary escalation in house prices which has taken place in our capital cities, particularly Sydney & Perth, in recent decades has many important lessons for us.

From my perspective, that of a builder who has been in the industry for more than 30 years and who has seen what has happened from the inside, it was bleeding obvious that the cause of rising house prices was the squeeze on the supply of land for new housing on the urban fringes of our major cities. It is the most basic law of economics that if supply is constrained for whatever reason, the price will rise. And in this instance supply was not just constrained, it was strangled almost to death.

But more disturbingly, all our important economic institutions, the Reserve Bank, the Productivity Commission, the Commonwealth Treasury & every economic commentator in the land refused to acknowledge that supply factors were the cause of rapidly escalating house prices and seemed interested only in demand factors such as capital gains tax breaks, negative gearing, interest rates, first-homebuyers’ grants & so on.

We need to ask, therefore, how did we get this unanimity of wrong advice? And how can we try to ensure that it doesn’t happen again?

While I have been banging on this drum for over 10 years, it has been pleasing in recent months to see the Prime Minister, the Treasurer & the Governor of the Reserve Bank, all highlighting the way in which state & territory government restrictions on land supply have created this crisis.

To fix the problem for good and ensure that future generations do not suffer the same fate, we need to do 5 things:

Where they have been applied, we need to remove urban growth boundaries or zoning restrictions on the urban fringes of our cities. Residential development on the urban fringe needs to be made a “permitted use”. In other words, there should be no zoning restrictions in turning rural fringe land into residential land
We need to encourage small players back into the market by abolishing compulsory â€˜master planning.’ If large developers wish to initiate masterplanned communities, that’s fine, but don’t make them compulsory
Allow the development of basic serviced allotments, ie water, sewer, electricity, stormwater, bitumen road, streetlighting & street signage. Additional services & amenities (lakes, entrance walls, childcare centres, bike trails, etc can be optional extras if developers wish to provide them and buyers are willing to pay for them)
Privatise planning approvals. Any qualified town planner should be able to certify that a development application complies with a local government’s development plan
No upfront infrastructure charges. All services should be allowed to be paid for through the rates system, ie, pay â€˜as’ you use, not â€˜before’ you use. The inequity of upfront infrastructure charging is obscene. First-homebuyers on the urban fringe are subsidising, through their electricity, water, sewer & council rates, the massive repair & upgrading of existing, older infrastructure in the inner suburbs in order to accommodate wealthy â€˜in-fill’ homebuyers.

Now a lot of people have expressed concern that if more land is released on the urban fringe to allow first-homebuyers back into the market, it will depress existing house prices in the inner suburbs. Not so. There is a big difference between entry-level first-home ownership on the urban fringe and house prices in existing suburbs. The 2 subjects are quite different and an understanding of buyer behaviour in the property market is required.

People who want to live in the inner suburbs will not move to the urban fringe no matter how cheap the land is. And the sheer volume of housing stock tells us that lowering the price of new blocks of land on the fringes of our cities isn’t going to affect the price of 10 million houses in the existing suburbs to any significant degree. Lowering the price of land also brings a whole new group of buyers into the market â€“ renters who can now afford to buy in.

When we provide people with the opportunity of home ownership we provide them with much more than a house. According to international & national research, homeowners have:

better health than their renting counterparts
their children do better at school
they have greater self-confidence
they move less frequently
they are more involved in their communities and
their children are much more likely to also become homeowners.

Further, in communities where home ownership levels are high, crime is lower, household incomes are higher, community involvement is higher and some studies have even shown divorce rates to be lower.

Homeowners have a tangible stake in their community. They live where they choose and for as long as they choose. Unlike renters, they do not face the prospect of having to pack up the family and move on at the expiration of every lease. Nor do they face ever-increasing rents for a property in which they will never have a stake.

While research may quantify the benefits of home ownership, it only confirms what has been intuitively known for centuries, namely that home ownership promotes security & stability. In the words of CS Lewis, “Urban areas are where the opportunities are.”

The economic & personal security that comes from investing in your own home delivers, over time, a reduced housing cost and the wide range of future choices that come with having a valuable & tradeable asset. When the time for retirement does come, people who own their homes have so many more choices than renters.

The cost of family breakdown, in both human & economic terms, is so great that we can ill afford to maintain obstacles that make life more difficult for families. Restoring home ownership is critical to the best interests of Australian families and the nation as a whole will benefit from the removal of the tyranny of urban planning.

Given the vast social, emotional & economic benefits that flow from strong marriages & healthy family life, not only for individuals but for entire communities, we all have a stake in their success.

Ensuring that home ownership is the expectation of the many rather than the privilege of the few is one of the most important & tangible ways in which we can encourage self-reliance and strengthen Australian families.

Mr Day sits on the Federal Government’s Work for the Dole Advisory Committee, is a director of the Australian economic & social thinktank, the Centre for Independent Studies, and was co-founder & president of Independent Contractors of Australia until July 2005 â€“ a role that would seem to be automatically conflicting for him, as his national building company, Home Australia Pty Ltd, engages more than 1000 trade contractors. He’s been secretary of the right-wing industrial relations advocate, the HR Nicholls Society, and a leading advocate for its policies. The society was founded by Federal Treasurer Peter Costello.

The American sprawl/compact, roads/transit debates have become quite petty & personalised â€“ and it’s harder to detect rational new points among them.

Conceptual differences also need to be recognised. Unlike the many US metropolitan areas which are continental in terms of access â€“ numerous access directions, and the ability to expand in many directions â€“ most New Zealand cities are coastal, the development preference is along the coastal strip and both access & expansion directions are limited.

You could say that, looking north from the existing Auckland urban area, the long-term development horizon has no limit. Whangarei is a long way north and there’s nothing much in between. But in practical terms, building suburbs out beyond Helensville and up the middle among the hills north-west of Orewa would be to create residential pockets with poor access, at least initially.

Heading south from Auckland, it’s possible to carpet into Franklin and, going down the coast to the Firth of Thames, do the same on the Hauraki Plains.

To do either or both of those north & south expansions without considerable forethought would be to carpet in the American manner, creating sprawl with large proportions of its population obliged to commute long distances.

Long journeys a key US issue

In the American sprawl & commuter travel arguments, a central issue is that people are having to travel further. Opponents of sprawl argue for central, compact areas where work & living can both be done within a short distance of each other. Opponents of compact say people like their suburbs and shouldn’t be harangued into leaving them.

I’ve argued before in favour of satellite cities and decentralised business areas within a metropolitan region. You can also look at the future of some outlying villages around main centres as combined local/commuter centres, but work towards that kind of future consciously rather than the haphazard way that’s occurred in many spots around Auckland.

One key issue is cost â€“ that’s being worked through in many ways in Auckland. Another is practicality (in some ways related to cost) â€“ is it practical for the poor to be forced to live hours from their jobs, with heavy transport costs loaded on them as well? Is it practical for everybody to drive to work at the same time, and all in the one direction?

In the article referred to below (A free-market approach to transit, in the US magazine Dissent), the president of the Action Committee for Transit in Maryland, Benjamin Ross, said conservative “free-market fundamentalists” campaigned that consumers should have the right to drive their cars because that was their preference.

But, Mr Ross said, underlying that stand was a more important theme sought by his opponents – roads should be subsidised: “Broadsides against transit issued by researcher-publicists like Wendell Cox, Randal O’Toole, Peter Gordon & Sam Staley set the tone of conservative thinking. These writers present themselves as free-market fundamentalists. The American transportation system, they argue, is a success, its domination by the automobile a reflection of consumers’ preference for driving their own cars. But when you scratch below the surface, their devotion to the sovereign consumer & the efficient market is a pose; concealed beneath the rhetoric is a defence of ever-increasing subsidies to the highway lobbyâ€¦..

“Decades of highly subsidised automobile use have introduced vast economic distortions in American transportation & land use. They impose an increasing price in economic inefficiency, environmental damage & loss of liveable communities. But the misguided policies of the past have been built into the landscape and they will not be easily undone.”

“Escape from traffic gridlock requires a shift toward price mechanisms in transportation; but the transition can only occur at a measured pace. It took more than half a century to build our present sprawl and it will take decades to replace it with something better.

“Far too many homes & jobs are located in places that can only be reached by long-distance driving, and intolerable hardships would be imposed by suddenly making drivers pay the full cost of the roads they use. The precondition to the needed shift is a massive expansion of public transit; when transit is not a good alternative to driving, fees charged for using the roads become regressive & unpopular taxes rather than signals to switch from a car to something better.”

Counter view in Lone Mountain compact

On the other side of the coin, a number of “scholars & writers” set down “10 principles for preserving freedom & liveability in America’s cities & suburbs” in the Lone Mountain compact, written in December 2000.

“The phenomenon of urban sprawl has become a pre-eminent controversy throughout the US,” they wrote. The Political Economy Research Centre gathered this group at a conference about the issue at Lone Mountain Ranch in Big Sky, Montana, where they distilled their conclusions into the brief statement of principles:

1. The most fundamental principle is that, absent a material threat to other individuals or the community, people should be allowed to live & work where & how they like

2. Prescriptive, centralised plans that attempt to determine the detailed outcome of community form & function should be avoided

3. Densities & land uses should be market-driven, not plan-driven

4. Communities should allow a diversity in neighbourhood design, as desired by the market

5. Decisions about neighbourhood development should be decentralised as far as possible

6. Local planning procedures & tools should incorporate private property rights as a fundamental element of development control

7. All growth management policies should be evaluated according to their cost of living & “burden-shifting” effects

The Brookings Institution in Washington has produced a 40-page paper reviewing land-use regulations in the 50 largest metropolitan areas in the US.

Not surprisingly, the authors found that control costs. They also concluded that the cheaper unregulated sprawl of Texas was likely to have a heavier future cost.

But they cautioned: “These summary observations must be treated as syntheses of correlations, not as direct statements of cause & effect. More research is needed to learn about the mutually supportive relationships among regulation, housing prices, sprawl & regional opportunity.”

The paper, From traditional to reformed: A review of the land use regulations in the nation’s 50 largest metropolitan areas, is by Rolf Pendall, an associate professor in the Department of City & Regional Planning at Cornell University and a senior research associate at Solimar Research Group; Robert Puentes, a fellow with the Brookings Institution’s Metropolitan Policy Programme; & Jonathan Martin, a PhD candidate in Professor Pendall’s Cornell department. It was done under the institution’s metropolitan policy programme.

In a separate 26-page paper, Annexation and the fiscal fate of cities, David Rusk from Brookings concluded that cities that were able to spread beyond existing boundaries had a better bond rate and were therefore fiscally healthier than those that didn’t or couldn’t spread.

I’ve taken 3 short tracts from the regulation paper to give a flavour of the research â€“ an overview, where housing prices are highest and deregulatory Texas:

Local land use regulations help define the character of cities, towns, counties & entire regions. Zoning, comprehensive plans, infrastructure control, urban containment, building moratoriums & permit caps can drive development outward, promote density, or something in between. They can also directly affect the composition of inhabitants by facilitating rental properties & low-income residents, especially when these regulations are coupled with programmes to promote housing affordability.

This comprehensive survey of local land use regulations finds a wide variety of regulatory regimes in the nation’s 50 largest metropolitan areas. They range from exclusionary & restrictive to innovative & accommodating. These produce a variety of effects on metropolitan growth & density, and on the opportunities afforded to the residents that live there.

Housing prices are highest in the Growth Control & Exclusionary regions

For at least 20 years, the main metric that has been used to determine the impact – and the acceptability – of land-use regulations has been the cost of housing (and usually the sale price of owner-occupied housing). While this study does not evaluate whether particular regulatory approaches cause higher housing costs, it does identify those that associate with systematically higher self-reported housing values & contract rent.

As reflected in table 5, by far the highest housing prices in the US are in the Growth Control metropolitan areas, owing mainly to the sky-high prices of the San Francisco metropolitan area. The average rent there in 2000 (around the peak of the dot-com bubble) was $US970, about $US75 higher than the average in the Virginia suburbs of Washington DC (the next-highest region). The average house value in the San Francisco metropolitan area that year was nearly $US425,000, a value $US130,000 higher than in the next-highest New Haven area.

Rents & home prices in metropolitan Denver, the other Growth Control family, are much lower than in San Francisco ($US680 average rent, $US220,000 average housing value), but the most “growth-controlled” parts of the Denver metropolitan area (Boulder County) have high prices that are balanced by lower prices elsewhere in the metropolitan area. Thus it appears inarguable that the Growth Control regulatory family, which combines a series of locally imposed & generally unco-ordinated urban growth boundaries with widespread building permit caps, associates with high housing prices.

In the summary of impacts of regulation:

Wild Wild Texas presents the closest thing the US has to land-use deregulation. How does this deregulation play out? With the exception of booming high-tech Austin, it has lower home prices than most other Sunbelt areas. Texas’ large metropolitan areas also have lower concentration of poverty & minority residents, and higher home ownership & college graduation concentrations in central cities than the exclusionary families. Finally, density did not drop much in the Texas metropolitan areas in the 1980s & 1990s, and in Austin density increased. But Houston, Dallas, Austin & San Antonio started out as some of the least dense large metropolitan areas in the US, and maintaining that level of density should hardly be treated as a badge of honour. Continued low-density development in Texas, especially in fringe & unincorporated areas with little or no regulation to mitigate environmental impacts, is bound to produce environmental, economic & social costs that will mount with the decades. This is especially true to the extent that rural development occurs in flood- & hurricane-prone areas. Internalising some of these costs would undoubtedly mean higher housing prices, a trade-off that the Texas Legislature has been generally slow to accept in the past.

The Reform families offer almost the polar opposite of either the Traditional or the Wild Wild Texas regulatory families. Generally, they are denser both as a current picture & over time and they offer more regional opportunity for low-income residents, blacks & Hispanics than the other families. These good outcomes come at the cost of higher average housing costs. But housing costs are much higher when reform turns growth management into growth control, choking off development inside urban growth boundaries as well as beyond them. In the other Reform families, especially Containment & Containment Lite, rents & housing values are substantially lower than in the Exclusionary metropolitan areas. To the extent that regulatory reform should be pursued in the Reform families, it can build upon strong comprehensive planning & permissive zoning to pursue more thorough land supply monitoring and incentives for local governments to designate much more land for housing development at medium & high densities.

These summary observations must be treated as syntheses of correlations, not as direct statements of cause & effect. More research is needed to learn about the mutually supportive relationships among regulation, housing prices, sprawl & regional opportunity.

About Bob Dey Property

The Bob Dey Property website is primarily about commercial & development property in Auckland, policies & strategies that impact on the sector, listed property securities and wider economic influences. It examines infrastructure, access & urban design issues, and presents ideas from around the world. The emphasis is on appropriate depth & context.